The Impacts of Contract Type on Broker Performance

Posted: 2 Sep 2004

See all articles by Abdullah Yavas

Abdullah Yavas

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics

Ronald C. Rutherford

University of Texas at San Antonio - Department of Finance

Thomas M. Springer

Florida Atlantic University - Department of Finance & Real Estate

Abstract

This paper offers a theoretical and empirical analysis of the exclusive agency and exclusive-right-to-sell contracts used in real estate brokerage. The theoretical model predicts that while both contract types will yield the same price, the exclusive agency contract will result in faster sales than the exclusive-right-to-sell contract. In the empirical model, we find that houses sold faster under the exclusive agency contract than the exclusive-right-to-sell contract. However, houses sold with exclusive agency contracts also sold at a marginally lower price. We also find a slightly greater concession from the listing price at the negotiation stage of exclusive agency listings.

Keywords: Agency problem, brokerage contract

JEL Classification: D8, K12, L14

Suggested Citation

Yavas, Abdullah and Rutherford, Ronald C. and Springer, Thomas M., The Impacts of Contract Type on Broker Performance. Real Estate Economics, Vol. 29, pp. 389-409, 2001. Available at SSRN: https://ssrn.com/abstract=584281

Abdullah Yavas (Contact Author)

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States

Ronald C. Rutherford

University of Texas at San Antonio - Department of Finance ( email )

San Antonio, TX 78249
United States

Thomas M. Springer

Florida Atlantic University - Department of Finance & Real Estate ( email )

5353 Parkside Drive
Jupiter, FL 33458
United States
561-297-2914 (Phone)
561-297-3686 (Fax)

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